Weak corporate governance leads to dispersed debt, impacting firm stability.
Some companies use different types of debt because of how well they are managed. Companies with weak management tend to have a mix of debt types, while well-managed companies focus on borrowing from a few creditors. Bank debt is linked to less concentrated debt, while market debt is linked to more concentrated debt. Understanding how companies choose their debt structure can help creditors monitor them better. This study shows that corporate governance influences how companies choose their debt.